tv Nightly Business Report PBS November 17, 2014 7:00pm-7:31pm PST
this is "nightly business report" with tyler mathisen and susie gharib. brought to you in part by -- >> the street.com and action alerts plus. with jim cramer and stephanie link share their investment strategies and market insights. you can learn more at thestreet.com/nbr. >> art of the deal. a price tag acquisition worth $66 billion. and closes the door on one of the more audacious takeover attempts in recent history. >> recession surprise. japan's economy unexpectedly contracts despite massive efforts to spur growth. will the u.s. feel the chill? and hanging in the balance. do supporters in the senate have enough votes to approve the keystone pipeline?
what will the president do if the senate acts? and which companies could benefit big time. all that and more tonight on "nightly business report" for monday, november 17th. good evening, everyone. a big day for big deals today. the buzz on wall street was all about two blockbuster mergers, one in the energy sector. we'll have more on that in a moment. the other in the health care sector. we begin with the bigger of the two deals, generic drugmaker actavis agreeing to pay $66 billion for allergan, the maker of botox. the massive price tag which amounts to $219 per share effectively ends a month-long hostile bid by hedge fund manager bill ackman along with canadian drugmaker valeant for the same company. investors approved. shares of actavis rose while allergan jumped 5%. more now on how actavis sealed the deal.
the bidding war for botoxmaker allergan didn't end up quite the way actavis investor bill ackman had been hoping for. >> more potential partners or combination partners say they're not interested in allergan puts valeant in a stronger negotiating position. >> back in april ackman start the bidding with the $350 billion offer, that he fought off vigorously. ackman's final bid topped one from actavis but ended up being no match for the $66 billion deal announced today. >> the offers never came close to the interests of the value of the company. the implied offer was $11 billion give or take away from what actavis is willing to pay for us, and i really feel that this is a fair price. >> so what is actavis buying? growth. sales growth at allergan has often exceeded 10% a year, not
the norm for most big pharmaceutical companies. how? for one thing, botox isn't just about wrinkles any more. it's being used to treat migraines, dry eye and even neurological disorders like m.s. it's commitment to fund research and development. >> r&d is one of the greatest combined late stage development port forl folios in the industry. >> analysts say the day will cut allergan's taxes by $300 million. that's because actavis recently moved its headquarters to ireland where tax rates are much lower than here in the u.s. despite the intense battles to buy allergan, ackman still made out quite well. he is allergan's largest shareholder. the value of his 10% stake has surged, giving him a profit of more than $2 billion. and actavis says that with the acquisition of allergan, the
combined company will have two dozen new products in late stage clinical testing. nmore now on the other majo merger confirmed today. halliburton has agreed to buy out the rival baker hughes, number three in the business, for nearly $33 billion in cash and stock. the deal was driven by the 30% tumble in oil prices just since june that's forced energy companies to cut costs and streamline production meaning less work for both companies. shares of baker hughes today up about 9% but halliburton fell nearly 11%. another deal is also making headlines today. pfizer is teaming up with merck to develop a drug to treat cancerous tumors. pfizer will pay merck $850 million up front for a percentage of sales. the drugmaker also lowered its 2014 outlook in part. yet another possible merger
that was reportedly in the discussion stage last week has apparently broken down. "the wall street journal" says that deal talks between dreamworks animation and the toymaker hasbro have hit a major snag over the structure of the combined company and that those talks are not likely to resume. hasbro shares weren't playing around today. rising more than 4%. but the curtain really did come down on shares of dreamworks. they lost 14%. on wall street today, stocks traded in a narrow range of gains and losses despite all that merger activity and expectations for additional stimulus measures in europe and japan. the dow added 13 points, the nasdaq was down 17 and a one point gain in the s&p was just enough to notch a new record high. more now on japan. it's the latest global economy getting weaker instead of stronger. today japan reported really terrible economic data despite massive, even unprecedented efforts to stimulate the economy.
michelle ka brousseau cabrera has the story. >> economists had expected japan's economy to expand by more than 2%. instead the japanese economy declined by 1.6%. this after it fell a whopping 7% last quarter. so japan is now officially in recession. economists blamed it on a big increase in the national sales tax earlier in the year which the government raised from 5% to 8% back in april. they thought those effects would have worn off by now, but they didn't. the japanese economy has struggled for nearly two decades. when measured in yen, the japanese economy is roughly the same size that it was back in the late '90s. this must be incredibly disappointed to the leader of the plan, shinzo abe. when taking office he promised that the government and the central bank would do much, much more to stimulate the economy. there would be more deficit spending and printing money. today's results raise questions about the future of any further measures. when it comes to japan's effect
on the united states, one member of the federal reserve said it just adds to the global headwinds blowing of an otherwise improving u.s. economy. >> the issue for us it really is global growth is weakening in a number of jurisdictions. europe is very weak, china has weakened, japan is weak, there's weakness in latin america. we haven't felt that here in the united states yet, but the risk really is that we'll begin to feel it through the trade channels or other channels. but we don't feel it yet. >> we expect to hear from the prime minister of japan overnight to hear whether or not he'll cancel another increase in the country's national sales tax which had been planned for next year. well, japan isn't alone, the euro zone economy is also struggling. and with the european union likely to announce new stimulus measures to boost the region's economy, jpmorgan todaydown graded its outlook on the u.s. stock market and upgraded european stocks. it says valueyations of american
companies relative to europe are, quote, outright expensive and that europe is due to outperform the u.s. markets. >> and those markets may be getting a big boost from mario draghi who says the bank could bind government bonds to accelerate growth. >> if the inflation expectation outlook were to worsen by itself, the council is willing and stands ready to act. as i said before it's unanimous in its commitment to undertake other unconventional measures beyond the ones being decided. the other unconventional measures might ebb tail the purchase of a variety of assets one of which is sovereign bonds. >> after those comments earlier today european stock markets erased early losses while yields on most lower rated eurozone bonds fell. a historic day for stocks in china and for global investors with the new mutual market program allowing access to
chinese-listed shares for the first time ever. we have more from the shanghai stock exchange. >> shanghai hong kong stock has begun. >> a lot of excitement from investors today over what's called the shanghai hong kong stock connection, which is a scheme which started today which allows investors in both of these markets to invest in the other market directly. a lot of people are excited about it because it's really seen as a way for foreign investors to get better access to shanghai-listed shares. it hit its daily limit because investors were buying up all sort of mainly consumer-led stocks, such as a hard liquor company as well as general motors partner here in china called saic. we're talking about kind of small numbers relative to the
market size but at the same time it's seen as a very significant move on the part of the government. it's seen as an important step to try to open up choin's financial system. china's second largest economy in the world, but a lot of people have seen the financial system as a laggard. the financial system as well as the capital markets have been largely sealed off. this is seen as a broader part of the reform effort here in china and one other that was quite interesting is investors here in china, main lie high network individuals say they're looking forward to investing directly into hong kong stocks to be able to broaden their own investment portfolios and really have a larger say. >> that was eunice yun reporting from shanghai. the senate is set to take up the keystone pipeline bill tomorrow, and if it passes, which companies could benefit.
some welcome relief for victims of bernie madoff, the court appointed trustee charged with directing funds to help compensate victims of the ponzi schemer says the total recovered now tops $10 billion. general motors is giving vehicle owners an extra month to file claims related to those faulty ignition switches. gm's program administrator, ken feinberg, explained why the deadline was extended until january 31st of next year. >> we want to make sure that everybody knows about this program, and out of an abundance of caution, we'll extend the filing deadline one more month. i don't think there are many
people out there, if any, that don't know about this program. >> well, this comes after the family of a connecticut woman who died in a crash 11 years ago said they didn't know gm had attributed her death to the defective switches until they were notified by a reporter just this month. good news for the government's mortgage insurer. it is making money. the federal housing authority is currently about $5 billion in the black. this comes after the agency increased premiums, raised the average fico scores for more borrowers and went after rogue lenders. a very different story for the federal agency that insures pensions for 41 million americans. the pension benefit guarantee corporation ran a record breaking $62 billion deficit last year, that doubled the shortfall it recorded just the year before. most of that is due to the poor financial condition of just a handful of large multi-employer pension plans. lawmakers will tackle two issues on capitol hill that
could have a big impact on your money and business. immigration and the keystone pipeline. john harwood is in washington tonight. john, what is the president preparing to do on immigration and when? >> on immigration, tyler, the president's preparing to issue an order that, using executive authority alone, not legislation, would grant legal status and the ability to work in the united states for an unknown number of millions of americans who -- or people who are now here illegally. this would be an expand of the dreamer legalization that he did a couple of years ago. in essence it defers deportation and grants legal status while that's taking place. we expect it to be some time in the next couple of weeks. not sure if the president will get a funding deal with republicans because they're angered by this move. >> tell us more. how do you thing the republicans will respond? >> well, some of them were strident republicans in the
congress may call for the impeachment of president obama. of course, republican leaders don't want that. others may try to shut down the government or refuse to raise the debt limit in the next couple of months when that ripens again. most likely i think will be republicans have short-term funding for the government so as not to let the obama administration get comfortable and perhaps file another legal challenge in addition to the one that's already in the courts. >> let's move to another highly divisive vote tomorrow. the senate is expected to vote on the keystone pipeline. what do we expect? >> the house has already voted to approve the pipeline and push the president to let that go forward. the senate is going to vote tomorrow evening. it is unclear if the republican majority plus renegade democrats including mary landrieu who is running in a runoff election trying to hold her seat have the 60 votes they need to move it forward, but if they don't have them now, they'll most certainly
have them in the next congress in january. >> let's say it does pass. how do you think president obama will respond to that? >> the president and his aides have both signaled they would veto the initial legislation on grounds that they're continuing their own administrative review, but the president's not strongly opposed to the keystone pipeline. i would expect after that veto he would see if republicans are willing to deal with him and give him some of his priorities in return for him going along with keystone. the question, of course, given what's going on with immigration and other issue, is there going to be my appetite for deal making. >> thank you, john. one day ahead of the senate vote on the keystone pipeline oil prices are little changed. crude was off. and now if the pipeline is approved, what will that mean to oil prices and which energy companies are poised to benefit the most? jackie deangelis has that story. >> the key stone xl pipeline
that will bring oil crude down to the coast. it seems a decision is imnebt. a potential approval comes at an interesting time. the blackdrop, blum eting crude prices. west texas intermediate down 25% year-to-date as the u.s. ramps production and the market fears of global supply glut. proponents of the pipeline say it will help transport crude safely, but even if they're right, what will it do to crude prices? >> whether approval of the pipeline is bullish or bearish for prices has supporters on both sides of the issue. the bulls will say that additional ways to transport crude means additional exploration for crude and a potential lifting of the ban on exports. the bears will say that you're moving crude to an area that's already well oversupplied with crude oil. >> meantime, from an investor standpoint, there are many stocks that could benefit from a yes vote here, especially with
an energy sector that's been beaten down more than 10% in the last three months alone. an obvious play, trans-canada, that's a company building the pipeline. another, canadian natural resource, that will send product through the pipe. here in the u.s., refiner valero will receive more product to refine. it's already benefiting from the lower leg of the pipeline that became operational earlier this year. then there's conoco phillips and also exxonmobil. they both have exposure do the oil sands. and a houston-based company to watch. an infrastructure play. one of its operating units will help build the pipeline. >> what we've learned in the last week is the democrats realize it's going to happen at some point. i do think either it happens over the next couple of days by the senate passing it or in january when republicans get the majority. >> at the moment all eye on the senate, then the president. for nightly business report" jackie deangelis. urban outfitters quarterly
profit tumbled by a third in the last quarter and that's where we begin tonight's market focus. they own brands like free people and saw costs rise. the company has continued to offer discounts and promotion, to attract shoppers which has pinched its margins, same-store sales also continued to decline last month. at the bell the shares initially plunged. they finished at $30.83, down two pennies. tyson saw shares rise after it posted better than expected fourth quarter profits. it could top wall street's view due to record beef price, lower feed cost and its recent purchase of hillshire farms. shares almost 6% higher, they finished at $43.03. promising data on one of merck's drugs sent shares is of that company higher today.
the cholesterol lowers medicine zetia said that adding it to another drug could lower the risk of heart attack. it did lower heart attack and stroke in patients already on aggressive therapy. this in a study that lasted almost a decade. shares finished at $59.46. shares of celdex showed that its drug shrunk brain tumors. the stock popped 28% to $18.25. and facebook is hoping to be a little more office friendly. according to reports, it's developing a new product aimed at professionals called facebook at work. the service will compete with linkedin but also with google drive and microsoft office by offering tools like shared documents for collaboration. shares fell slightly to 74.24. linkedin also tumbled on the
report, down 223.28. it looks like smooth sailing so far for the second year rollout of the affordable care act open enrollment period on the healthcare.gov website. cynthia burrwell sounded upbeat about the number of americans looking to sign up for a health care plan. >> in first two days of open enrollment, we've seen 1 million visitors to the site. we have had 200,000 calls to our customer center. there are those who actually want to talk to people about it. and 20,000 of those are to our spanish language lines. >> bertha coombs joins us with more. it sounds if the federal exchanges were off to a reasonably good start. what about the state exchanges? >> half of them last year had tremendous problems, quite a number of them actually revamp and rebuilt their entire
systems. and they had a fairly good result as well. washington state, which performed fairly well last year, they found very early on on saturday they were calculating subsidies incorrectly. so they took the site down overnight. but nobody else seemed to have that problem. in massachusetts, where last year even coming into the fall there were people who they had not beenible to calculate their subsidies. they will about 3600 people get through, fill out their applications and determine their eligibility. that was a huge improvement. >> i'm wondering if things continue like this going so well, will the exchanges have to have a big marketing push to remind people to sign up? because it's just not going to be in the headlines that much. >> a high class problem to have. you want the website to be working well, but at the same time out of sight, out of mind. jonathan wu said last year it was always in the headlines, so
you did get that big push going into december when people were looking to apply. now they've really got to generate a lot more activity, a lot more news because it's basically working, so it's no longer really a headline story, at least early on here. >> two related questions i'll ask you to answer quickly. do we know who is signing up and these are related, do we know what the premium increase will be this year? >> it depends on where you are. in some markets the premiums have come down. there's a benchmark premium where they set those subsidies. one thing that everyone is saying even if you liked your plan from last year it behooves you to look through and shop. and especially if you're dependent on a subsidy, you want to make sure that you find something that matches your subsidy and that you don't just automatically re-enroll. >> the plan you had in this calendar year may not be the best priced or best one for you
next time. >> it may not be. it behooves you to go online and shop and look at numbers. coming up, finding creative ways to ak celebrate medical research at a time when government funding for science is coming under pressure. finally tonight with government funding for medical research under pressure, the annual partnering for cures conference took place in new york city today on how best to secure industry and philanthropic funding for medical advances. mike terrell has more. >> sonya knows firsthand the urgency of seeing the fruits of medical research.
four years ago she lost her mother to what turned out to be a fatal disease, fatal familia insomn insomnia. >> i inherited a risk to get that disease. we decided to get tested. we were thinking about it as we wanted the knowledge either way. and so we got the test done and learned that i have it. hend a treat or cure. they joined a thousand others today across industry, government and research at the milken institute's partnering for cures conference in new york, a community focused on finding creative ways to accelerate research. something chairman milken knows well. >> you can fund things very quickly today. that's this enormous investment by the american people over the past 20 years, there are fundamental changes going on.
>> milken is known for his work in prostate cancer. now his organization is spurring work across a spectrum of diseases from alzheimer's to bacterial resistant infections. pressure could slow funding. >> despite all the promise of medical research, the last ten years have seen a drop in the investments in the u.s. and bio medical research. 20% loss in purchasing power. that slows down everything. >> as for sonya, her mother passed away at the age of 50. sonya, now 30, says she's optimistic about their mission. >> an exciting time to be in science. i feel lucky about it every day. there are no guarantees for me and we'll see. i really do believe that it's a matter of time. we just don't know how much time. >> for "nightly business report" i'm meg terrell. >> that's "nightly business report" for tonight.
thanks so much for watching. i'm susie gharib. >> i'm tyler mathisen. we'll see you right back here tomorrow night. "nightly business report" has been brought to you in part by -- >> thestreet.com and action alerts plus where jim cramer and fellow portfolio manager stephanie link share their investment strategies, stock picks and market insights. you can learn more at thestreet.com/nbr.
>> welcome to "film school shorts," a showcase of the most exciting new talent from across the country. experience the future of film next on "film school shorts." "film school shorts" is made possible by a grant from maurice kanbar celebrating the vitality and power of the moving image and by the members of kqed. >> boy: my mother was the first person in town to die fr